MOSL: EXPERT SPEAK-Gas industry – the new beanstalk, Great potential for long-term structural growth

​EXPERT SPEAK: Gas industry – the new beanstalk, Great potential for long-term structural growth

Mr Darshan Hiranandani; MD, H-Energy

Mr Hiranandani heads the energy venture of the Hiranandani group. He holds a Masters degree, with a major in Entrepreneurship and Finance from the Rochester Institute of Technology, USA. Under his able leadership, the company has ventured into LNG regas terminals and natural gas pipeline projects in India. The company also plans to develop a liquefaction project and crude oil infrastructure in Canada.

The company has chartered a 4 MMTPA Floating Storage and Re-gasification Unit (FSRU) from Engie. The FSRU is expected to be docked at Jaigarh port from mid-2018. Jetty construction has been ongoing since 2017. The EPCM (Engineering, Procurement, Constructions and Management) contract for tie-in line has been awarded to Engineers India Limited for completion of 60km pipeline from Jaigarh to the existing Dabhol gas grid. It is also planning a 635km Natural Gas pipeline from Jaigarh to Mangalore with a capacity of 17mmscmd.

In Jack and the Beanstalk, Jack’s magical beans turn into a beanstalk, reaching into the skies overnight. The beanstalk becomes an enabler to a ‘lived happily ever after’ story. The Gas industry in India could very much be such a beanstalk, believes Mr Darshan Hiranandani, the Managing Director and Chief Executive Officer of H-Energy.

Key takeaways from our recent conference call with Mr Hiranandani:

Gas is what Telecom was 20 years ago

Lack of a free market and infrastructure in India has constrained the development of the Gas sector. While coal, petcoke and fuel oil are cheaper alternatives, natural gas is more economical than alternatives like diesel and naphtha. Then, there is the added advantage of convenience in terms of continuous supply, consistent quality and no requirement of storage/inventory. However, the current scenario of a monopolistic regime and onerous contracts is discouraging. Several small and medium enterprises prefer to stay away from usage of natural gas, even if it means higher cost and inconvenience. Going forward, emergence of new market players would increase the options for the buyers and aid the development of the sector. The regulatory board is also looking into unbundling of transmission and marketing, which could further open up the sector for smaller players. The Gas industry is all set to see the transformation that the Telecom industry has gone through in the last two decades